First National Outdoes Estimates

• By Zacks Equity Research
• On 12:17 pm EDT, Friday October 16, 2009

First Horizon National Corporation (NYSE: FHN - News) reported third quarter net loss of 24 cents, better than the Zacks Consensus Estimate of a loss of 34 cents. Net loss improved to $52.9 million in the quarter, compared to $125.1 million last year, primarily due to a decrease in provision for loan losses and a reduction in non-interest expense.

Total revenue shrank 4.7% to $494.7 million due to a decline in capital markets fixed income revenues, partially offset by an increase in mortgage banking income and a repurchase of bank debt.

 

Net interest income declined 14% year-over-year to $190.9 million. Net interest margin was 3.14% an increase from 3.01% in the prior-year quarter mainly due to an improved balance sheet position and a lower deposit costs.

Non-interest income was $303.8 million, an increase from $293 million in the prior-year period. Non-interest expense was $350 million, down 10% year-over-year.

Provision for loan losses shrank to $185 million from $340 million in the year-earlier quarter. Credit metrics showed an improvement, with net charge-offs declining 30% year-over-year to $201.7 million. However, non-performing assets increased 20% year-over-year to $1.2 billion.

First Horizon reported an improvement in capital position witnessed by its capital ratios: Tier 1 capital and Tier 1 common third quarter estimates were 13.47% and 9.88%, respectively, compared to 8.94% and 8.85% in the prior-year quarter.

Book value per share stood at $10.43 per share a decline from $11.85 per share last year.

Some of the positive signs during the quarter were an improvement in overall credit quality, average core deposit growth and an expansion in net interest margin. However, until the overall economy improves, First Horizon’s results will remain under pressure.

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